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PLACE YOUR BETS: Casinos get another spin

on Beacon Hill

The Lowell Sun

Updated:
01/01/2010 06:35:56 AM EST

By Brittany Abery and Justin Meisinger

Boston University Statehouse Program

BOSTON -- After studying the gambling debate in America, Baylor University economist Earl Grinols concludes that politicians are often guilty of over-hyping casinos as a salvation for their states' budgets and work force.

"Gambling experts and even gambling spokesmen frequently suggest that such arguments are exaggerated or false," Grinols says.

Jeff Hartmann, chief operating officer of Connecticut's Mohegan Sun casino, agrees with Grinols, suggesting that casinos are "not a panacea, and no one should view it as one."

Such caveats are often swept away by big numbers promising hundreds of millions of dollars for stalled state budgets and tens of thousands of jobs to turn the tide of unemployment.

But Grinols says it is the small numbers that need attention as well: The incremental costs of new roads and utilities; the need for more police, teachers and schools. And those who have lived with casinos offer other numbers for consideration -- increased levels of crime and other social costs such as gambling addiction.

"Their cautions are often ignored by elected officials who face pressures to do what they can to aid their communities and therefore want to believe that gambling will help," Grinols says.

Many Massachusetts lawmakers are eager to put down a bet that casino gambling will bring the state the same treasure it has elsewhere. At the least, they argue, homegrown casinos will capture the gambling money now going out of state.

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More immediately, House Speaker Robert DeLeo plans to file legislation early next year to license slot machines at the state's track as an almost instant revenue generator, despite the protests from Gov. Deval Patrick and others who prefer resort casinos to slot parlors.

"There has to be a resort casino in the mix," said Sen. Steven Panagiotakos, D-Lowell, chairman of the Senate Committee on Ways and Means. "The slot machine issue will have to play out. But we really want a destination resort to create jobs.

"No matter what revenue we get from gaming, it won't be the total solution. It can be part of a solution, but it's also about jobs. That's what's important to me," Panagiotakos said.

The riches casino gambling can bring are enticing. Nevada -- with the lowest gambling taxes ranging from 3.5 to 6 percent on all money spent at casinos -- has an annual take of $900 million or nearly 3.6 percent of the state's annual budget.

Last year casinos contributed $2.5 billion to state coffers nationwide; 10 states receive more than 10 percent of their income from gaming taxes and profit sharing.

Most states with commercial casinos impose taxes ranging from 8 to 55 percent, contributing between $300 million and $800 million to each state's budget. Some states also impose additional fees, such as admissions taxes, a tax per slot machine and mandates requiring casino owners to invest in the infrastructure of surrounding communities.

That last requirement is important to the communities that feel the impact on their roads, water and electric utilities.

Hartmann says Mohegan Sun is prepared for such challenges if it is able to move ahead with its plan for a central Massachusetts casino in Palmer.

"We're going to work with the community to get high access to the site, a fly-over from the Mass Pike," he says. "We'll have to work to balance the facility with the water demand."

Both Mohegan Sun and the developers behind Milford's Crossroads Casino Resort proposal are calling for designated fly-over exits from nearby interstates that would allow casino traffic to bypass local roads.

The Palmer Study Committee, tasked with studying the impact of the Mohegan Sun proposal, has concluded there will be more impact than just traffic. The town would need up to 24 more police officers costing almost $2 million, two schools each costing $40 million and added expansions to local fire departments costing around $2.5 million.

Municipalities surrounding the Connecticut casinos have incurred similar expenses. And there have been other impacts.

Social costs

Norwich, located near both casinos, has experienced profound changes since Foxwoods opened in 1992. Norwich police have reported increased housing issues, particularly a rise in illegal boardinghouses for casino employees. In 2007, the town hired a police officer to specifically address housing blight and substandard housing.

DUI arrests have doubled since 1992; nearly 20 percent of those arrested said their last drink was at a casino. According to a 2009 Connecticut study on the effects of gambling, arrests for embezzlement have increased four-fold statewide in the past 18 years.

The casinos have meant an influx of immigrant workers into the town. Norwich's 400 public school students now speak 20 languages. As a result, the school system spends an additional $2 million a year, primarily to cover English as a Second Language classes.

Casinos often bring an increase in gambling addiction. Of the 24 counties nationwide with the highest personal bankruptcy rates, nine are in close proximity to at least three casinos, according to a study by the SPG Foundation, a nonprofit organization whose stated goal is to inform citizens of the effects of legalized gambling.

The Massachusetts Medical Society testified at an Oct. 29 hearing by the Joint Committee on Economic Development and Emerging Technologies that the state would need to spend $6 million a year to address an increased need for treatment of compulsive gambling.

Some of those costs would be offset by casino revenues and contributions from casino operators.

Some say Massachusetts is bearing some of these burdens already because state residents travel to Rhode Island and Connecticut to gamble. Rep. Bill Bowles, D-Attleboro, said casino revenue will provide the state with the resources to deal with any issues casinos might bring, mitigating their effect.

But Rep. Steven D'Amico, D-Seekonk, disagrees. He says that additional casinos are likely to create new addicts, necessitating lifelong treatment.

"There are those social costs that aren't mitigated by any amount of money that you throw at the problem," said D'Amico. "It's really sort of a predatory industry that makes most of its money from people with compulsive disorders."

Casino supporters point to another big number -- investments that bring money and jobs. Connecticut casinos pay $1.2 billion a year in salaries. Casinos in three neighbor states have spent more than $600 million each to construct new facilities in the last five years. Mohegan Sun, which halted work on a second hotel during the recession, is now looking for partner to restart the project.

Hartmann says the negatives of casino gaming are far outweighed by their contributions to local communities and state budgets.

"We'll hire, with our facility, 2,500 to 3,000 employees," said Hartmann, who notes the multiplier effect of those jobs will enrich the economies of Palmer and Springfield. "The impact for western Massachusetts and the Palmer region will be tremendous."

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